The housing market in the San Francisco Bay Area continued on its downward slide in June. Home sales were down, foreclosures were up, and median...
The housing market in the San Francisco Bay Area continued on its downward slide in June. Home sales were down, foreclosures were up, and median...
View Housing Market Watch RSS feedHome sales declined once again in the San Francisco Bay Area over the month of June. According to the most recent reports, homes sold at their slowest pace for 12 years, and prices have begun to dip as well. Markets that performed the worst last month include those in Napa County, Solano County, and Sonoma County.
By Ben W. (bdarbs)
The housing market in the San Francisco Bay Area continued on its downward slide in June. Home sales were down, foreclosures were up, and median prices have started to crumble.
For the 29th month in a row, sales of houses and condos declined when compared to the previous year. There were a total of 7,964 houses and condos that changed hands during the month of June. This is down 1.4 percent compared to the 8,080 homes that sold in May, and down 26.5 percent compared to June of the previous year.
The slow sales have started to affect median home prices, which declined in four out of the nine-counties located in the Bay Area region. Napa County alone had a 15.2 percent price decline, and prices slipped by a disconcerting 11.7 percent in Solano County.
| County | Median Price - June 2006 | Median Price - June 2007 | % Chg |
|---|---|---|---|
| Alameda | $600,000 | $605,000 | 0.8 |
| Contra Costa | $599,000 | $597,000 | -0.3 |
| Marin | $830,000 | $961,250 | 15.8 |
| Napa | $680,500 | $577,000 | -15.2 |
| San Francisco | $790,000 | $825,000 | 4.4 |
| San Mateo | $770,000 | $795,000 | 3.2 |
| Santa Clara | $681,000 | $699,000 | 2.6 |
| Solano | $475,000 | $419,500 | -11.7 |
| Sonoma | $580,000 | $532,500 | -8.2 |
| Entire Bay Area | $648,000 | $665,000 | 2.6 |
Source: DataQuick
Looking at the numbers above, it might appear odd that DataQuick reported an overall median price increase of 2.6 percent in the Bay Area. After all, several counties had significant, double-digit price declines.
The reason for this is because the median is not the average of asking prices, but merely a number illustrating that half of the homes sold above this amount and that half sold below.
When homes on the low end of the market sell at a slower pace than those on the high end of the market, the median will increase. This, however, does not mean that home values are going up.
Looking carefully at MLS data recently compiled by ZipRealty there has actually been a significant reduction-20 to 50 percent-in asking prices around the Bay Area.
| # Sold June 06 | # Sold June 07 | % Change |
|---|---|---|
| 10,830 | 7,964 | -26.5 |
| # Sold May 07 | # Sold June 07 | % Change |
|---|---|---|
| 8,080 | 7,964 | -1.4 |
Home sales in the Bay Area have decreased in year over year comparisons for 29 months in a row. With a decrease of 26.5 percent, June sales were at their lowest point in 12 years.
| County | June 06 Sales | June 07 Sales | % Chg |
|---|---|---|---|
| Alameda | 2,198 | 1,536 | -30.1 |
| Contra Costa | 2,102 | 1,413 | -32.8 |
| Marin | 355 | 359 | -22.7 |
| Napa | 195 | 128 | -34.4 |
| San Francisco | 705 | 633 | -10.2 |
| San Mateo | 906 | 755 | -16.7 |
| Santa Clara | 2,763 | 2,163 | -21.7 |
| Solano | 773 | 453 | -41.4 |
| Sonoma | 735 | 533 | -27.5 |
Source: DataQuick
Home sales declined in every county within the nine-county region. The worst sales declines were in Solano, Napa, Contra Costa, and Alameda Counties. Not surprisingly, the lack of sales has put downward pressure on prices in these same areas.
| Area | 1 Bdr Rent June 06 | 1 Bdr Rent June 07 | % Change |
|---|---|---|---|
| Napa | $845 | $856 | 1.3 |
| Oakland-Fremont | $1,045 | $1,055 | 0.9 |
| San Francisco | $1,227 | $1,239 | 0.9 |
| San Jose-Sunnyvale | $1,059 | $1,068 | 0.8 |
| Area | 2 Bdr Rent June 06 | 2 Bdr Rent June 07 | % Change |
|---|---|---|---|
| Napa | $1,098 | $1,112 | 1.3 |
| Oakland-Fremont | $1,238 | $1,250 | 0.9 |
| San Francisco | $1,536 | $1,551 | 0.9 |
| San Jose-Sunnyvale | $1,273 | $1,284 | 0.8 |
| Area | 3 Bdr Rent June 06 | 3 Bdr Rent June 07 | % Change |
|---|---|---|---|
| Napa | $1,519 | $1,538 | 1.3 |
| Oakland-Fremont | $1,679 | $1,695 | 0.9 |
| San Francisco | $2,051 | $2,071 | 0.9 |
| San Jose-Sunnyvale | $1,831 | $1,846 | 0.8 |
Residents of buildings in the Bay Area with a fair market rent increase rule in play were fortunate this year, as other people who rent were not as lucky in certain cases. According to the Novato-based RealFacts, the average rents for apartment units (all sizes) increased 8.3 percent in a year over year comparison.
Rents now average $1,489. This may seem steep, but compared to the average Bay Area mortgage payment of $3,219, it is actually rather reasonable.
| County | Q2 2006 | Q2 2007 | % Chg |
|---|---|---|---|
| Alameda | 649 | 1,612 | 148.4 |
| Contra Costa | 725 | 2,316 | 219.4 |
| Marin | 58 | 118 | 103.4 |
| Napa | 47 | 128 | 172.3 |
| Santa Clara | 530 | 1,275 | 140.6 |
| San Francisco | 127 | 257 | 102.4 |
| San Mateo | 222 | 463 | 108.6 |
| Solano | 350 | 1,065 | 204.3 |
| Sonoma | 157 | 407 | 159.2 |
| Entire Bay Area | 2,910 | 7,696 | 164.5 |
The number of foreclosures was high in the first quarter within the Bay Area, but the totals were modest compared to the surge of foreclosure activity in the second quarter. The highest number of foreclosures occurred in Contra Costa, Alameda, and Santa Clara Counties, but the biggest increase in activity was seen in Contra Costa, Solano, and Napa Counties.
| Total Foreclosures June 2006 | Total Foreclosures June 2007 | % Chg |
|---|---|---|
| 20,909 | 53,943 | 158.0 |
Foreclosures continued to plague homeowners and lenders in the state of California. The number of defaults increased by a whopping 158 percent, and surpassed the totals recorded for every other quarter in the last decade. Many of the mortgage loans that went bad were made between the summers of 2005 and 2006.
*The foreclosure information in the above comparisons was obtained from DataQuick Information Systems. According to some economists, DataQuick understates foreclosure numbers. DataQuick, however, denies these claims.
Understated or not, there was a notable increase in foreclosure activity within the Bay Area and throughout the state of California.
June was a tough month for the Bay Area housing market. Most realtors can't even remember when sales have been this slow.
While median prices have held tight in some cases, this trend is unlikely to continue. Eventually the slow sales and rising foreclosures will push prices down.
Many economists are surprised it hasn't happened already, but as Marshall Prentice, DataQuick president explains it, many sellers would rather hold their property than lower its price at this point in time.
'Obviously there's still a bit of a standoff between buyers and sellers. It looks like unsuccessful sellers would rather take the home off the market than bring the price down, which is remarkable after almost two-and-a-half years of sales declines,' said Prentice in a statement.
To view previous Bay Area Housing Reports, click on the links below:
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